The former Deal or No Deal presenter has secured a “seven-figure” sum, thought to be up to £1.5m, from the specialist litigation funder Therium. Therium is also behind a class-action lawsuit against the carmaker Volkswagen over the emissions scandal.

Litigation funders provide financial backing to claimants they believe have a good chance of being awarded damages in a legal dispute. In return, the investors receive a fee or a percentage of any eventual settlement.

“We fund legal actions on behalf of individuals, groups and companies which are meritorious and where the funding provides access to justice,” said Timothy Mayer from Therium. “This includes cases that would otherwise struggle to make it to court, given the costs of legal action, especially when going against one of the country’s largest retail banks.”

The claim relates to losses from the collapse of the celebrity’s entertainment firm Unique Group a decade ago, as well as the distress and humiliation he says he has suffered.

The deal for litigation funding follows Edmonds pulling out of mediation talks to settle his claim. In November, Edmonds said “it was evident” that he and his case would not be compensated “swiftly, fairly and appropriately”. He said he had received only a “derisory offer”, thought to be just a few million pounds.

“Noel’s legal action against Lloyds Banking Group is now fully funded by Therium, with the added benefit of ATE [after the event] insurance, which means that Noel is also insured against any costs order that might be made against him,” said Jonathan Coad of Keystone law, which represents Edmonds.

Lloyds had denied there was any wrongdoing at its Reading branch until two of its former employees were convicted of fraud last February. A group of six financiers, nicknamed “Britain’s Wolves of Wall Street”, were jailed for a combined 47 years and six months for their part in the £245m loans scam, which destroyed several businesses.

“Lloyds Banking Group made determined efforts to reach a consensual resolution with Mr Edmonds through mediation late last year, but this was not possible,” said a spokesman for the banking group. “As a formal litigation process has begun, it would be inappropriate to comment other than to say his claim will be contested.”